Market Report: Tech stocks gain after strong show by US peers

The bulls were back in control of London stocks yesterday, spurred on by some impressive corporate data from the US and a continued slide in the oil price.

The bulls were back in control of London stocks yesterday, spurred on by some impressive corporate data from the US and a continued slide in the oil price. The FTSE 100 index closed 28.6 points higher at 4,655.2 as the technology titans IBM and Texas Instruments both posted better-than-expected earnings. Investors were particularly excited by the upbeat outlook statement that accompanied IBM's figures.

The news inevitably got players on this side of the Atlantic interested in techs and helped LogicaCMG gain 5.5p to 173.5p, Computacenter go 6p better to 322p, Spirent climb 1.75p to 62p and Marconi rise 10p to 520p. The fact that the price of oil continued its retreat yesterday only buoyed shares further. The soaring crude value had acted as a dampener on stock markets, causing worries that it would slow the pace of global economic growth.

Tom Hougaard, the chief markets strategist at City Index, expects the FTSE 100 to trade at between 4,600 and 4,700 points for the time being. "A move above 4,700 will be bullish for the market, but it does not look as if investors are in a hurry to fill their pockets ahead of the US election. A Kerry victory, or lead in the opinion polls, could easily upset Wall Street", he argued.

Airlines performed particularly well as the price of crude plummeted. British Airways jumped 6.25p to 206.75p, easyJet rose 3.25p to 125.5p, and Ryanair improved 6 cents to €3.76. Market professionals also reported rumours of a possible bid for easyJet. The most likely buyer of the airline is its founder Stelios Haji-Ioannou. His family remain the company's biggest shareholders.

Allied Domecq gained 5.75p to 494.75p amid speculation that the drinks giant may be interested in bidding for the US wine maker Robert Mondavi Corp. Mondavi has confirmed a takeover approach but refuses to say who the bid is from. Allied is known to be keen on expanding its wine-making assets and analysts believe the group would be interested in Mondavi at the right price. Elsewhere in the sector, Diageo ignored a downgrade by Merrill Lynch and rose 2p to 738p. The US broker slapped a "sell" rating on Diageo and suggested that it was overvalued at present levels.

Meanwhile, the copper maker Antofagasta, down 23p to 1,042p, was hurt by a downgrade from Merrill. Although the broker believes there is nothing operationally wrong with the company, it expects copper prices to drop going forward, which, it warns, will inevitably hit earnings at the mining giant. Aggreko improved 7.5p to 151.75p after a well-received presentation by its chief executive, Rupert Soames, at a conference organised by Citigroup.

Shares in water companies were in demand after South Staffordshire, up 122.5p to 1,002.5p, said it had received a takeover approach from a private equity house. Kelda gained 8p to 551p, Pennon improved 28.5p to 894p, and Bristol Water jumped 24p to a new high of 469. East Surrey, up 12.5p to 352.5p, was talked of as being among the most vulnerable in the sector to a takeover.

Corus rose 0.5p to 49.5p as the latest piece of industry data hinted at further rises in the price of steel. The Anglo-Dutch steel maker is a top contender to replace Abbey National in the FTSE 100. The mortgage bank will be removed from the blue-chip index on 15 November, after the completion of Banco Santander's takeover. International Power is also very much in the frame for promotion to the top flight. Its shares rose 3.25p to 155.5p after JP Morgan upgraded the stock to "overweight" from "neutral" and set a 165p price target.

Continued worries about the state of the housing market weighed on the construction sector. Barratt Developments dropped 4p to 512.5p, Berkeley retreated 15p to 1,200p, Bovis Homes fell 5p to 506.5p and Redrow lost 2.5p to 344p. George Wimpey was the worst hit, falling 14.5p to 358p, as analysts noted that the group is among the most heavily geared in the sector. The company has debts of about £800m, leaving its shareholders among the most exposed to any downturn in the UK housing market.

Ted Baker gained 9.5p to 451p with punters convinced that the retailer has had a great start to the autumn. Sales at the group are said to be well ahead of those seen this time last year. A positive trading statement from Civica helped its shares add 8p to 211p. Oystertec firmed 0.75p to 25.75p on the back of the purchase of 132,000 shares at 25p each by Colin Cooke, a non-executive director at the engineer, while Vebnet Holdings added 10.5p to 176.5p after securing a major contract win for its technology. St Helen's Capital, the Ofex-listed corporate finance house, jumped 0.25p to 8.63p on news of a return to profitability.